Good day, ladies and gentlemen, and welcome to the fourth quarter 2009 Exelixis earnings conference call. My name is Stephanie, and I'll be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) I would now like to turn the conference over to your host for today, Mr. Charles Butler, Vice President, Investor Relations. You may proceed.

Thank you for joining us for the Exelixis fourth quarter and year-end 2009 conference call, earnings call. Joining me on today's call are, as usual, George Scangos, Frank Karbe, and Mike Morrissey, who will collectively review our corporate, financial, and development progress for the quarter and the year just completed; discuss our strategy for advancing 184, XL147 and 765, our most important and nearest term value drivers; and, outline our goals and objectives for 2010 and beyond. Before we get started, I would like to note that during our presentation and question-and-answer session, today we will be making certain statements that are forward-looking, including without limitation statements related to our business, R&D, and financial goals for 2010 and beyond; the restructuring plan announced yesterday and its impact on our business; our development plans and goals for XL184, XL147, XL765, and other compounds in our pipeline; expectations regarding our 2010 year-end cash balance; and, our 2010 financial outlook with respect to revenues, operating expenses, and cost savings and charges related to the restructuring. These statements are only predictions and are based upon our current assumption and expectations. Our actual results and the timing of events could differ materially from those anticipated in such forward-looking statements because of risks and uncertainties discussed in the presentation of materials, the comments made during this presentation, and the risk factors section of our 10-Q for the quarter ended October 2nd, 2009, and other reports filed with the Securities and Exchange Commission. We expressly disclaim any duty to make any updates or revisions to any forward-looking statements. And with that, I'll turn the call over to George.

Okay. Thanks, Charles, and thanks to all of you for joining us today. The fourth quarter was I think a very strong finish to what was a transformative year for Exelixis. For the first time, we have advanced late-stage compounds that are in broad development programs in tumor types with significant market potential. Our lead compound, XL184, is in a Phase 3 trial for medullary thyroid cancer, Phase 2 trials for gliobastoma and non-small cell lung cancer as well as a randomized discontinuation trial that will assess its potential across nine different tumor types. The two PI3K inhibitors, XL147 and XL765, have entered broad Phase 2 program, and the emerging data for all of these compounds is quite promising. The hard work and financial investment that we made in discovery and early clinical development over the past several years, clearly, is bearing fruit. Financially, 2009 was a very strong year. We finished the year with over $220 million in cash, easily meeting our stated goal of ending greater – of ending the year with greater than $200 million. We were successful in our business development efforts and find a major collaboration with Sanofi-Aventis as well as a collaboration with Boehringer Ingelheim, which brought in substantial cash. Compared to 2008, our 2009 expenses and net loss were down, and our revenues were up. As you will hear in a few minutes, we expect this trend to continue in 2010, with 2010 revenues expected to be significantly greater than 2009, and 2010 net loss substantially less than 2009. We again expect to end 2010 with a healthy cash balance. The substantial restructuring of our company that we announced yesterday is a consequence of the strategy that we described in our R&D Day in December. It is a reflection of our commitment to…

Thanks, George. As announced yesterday, we are balancing the Exelixis R&D operations to fully align our resources with the strategy on focusing on mid and late-stage clinical compounds. We will prioritize our allocation of internal and external resources to advanced and full development program for XL184, XL147, and XL765. We will also scale our capacity in drug discovery through clinical development and only development to one new IND per year and a single Phase 1 compound. Let me emphasize that we will maintain a fully functional and innovative R&D organization, and continue to execute the broad range of activities within drug discovery, pre-clinical development, translational medicine, and early clinical development that have enabled us to build one of the strongest and deepest pipelines in oncology R&D. In the simplest terms, we will maintain a clear focus on expediting the development of our advanced assets on moving forward with the lower operative new compounds than in previous years. XL184, which we are co-developing with BMS, remains our lead compound and is therefore allocated the highest level of support from the Exelixis R&D team. We continue to be extremely excited about the potential of XL184 in numerous oncology indications, and enjoy broad support from world-class investigators and oncology thought leaders. Medullary thyroid cancer is the lead indication for XL184. And we expect to complete enrollments of the ongoing Phase 3 pivotal trial in MTC this year, and plan to file an NDA for this indication in the second half of 2011. We continue to aggressively pursue other potential indications, and have seen encouraging signs of clinical activity with XL184 as a single agent in patients with refractory gliobastoma, and in a combination with erlotinib in patients with non-small cell lung cancer. We continue to investigate different doses and/or regimens in patients with…

Thank you, Mike. I will begin with the 2009 financial results. But before I dive into the details, let me summarize a few highlights. Our financial strategy for the year had three main elements to it. One, partner compounds with the aim to bring an upfront cash to share our future development expenses with the partners; two, reduced costs, which in conjunction with new partnerships was aimed at reducing our unfunded expense; and three, focus our international development on our most promising opportunities with the goal to aggressively advance assets in our pipeline that we believe have the greatest near term therapeutic and commercial potential. We have successfully executed against all three of these objectives. And the accomplishments in 2009 that George and Mike have alluded to earlier are clearly reflected in the significantly improved financial performance of the company. Year-over-year, our revenue is up almost 29% due to new partnerships. Our operating expenses are down about 8% despite a very significant expansion of our development activities around our lead compounds. And our net loss is down 17% despite a number of significant run-off charges. Moreover, we ended the year with well over $200 million in cash, and a substantially higher share of operating expenses being funded by partners than in 2008. Let me now turn to our financial results in detail for the quarter and year ended December 31st, 2009. And as usual, we are reporting our financial result on a GAAP-basis only. And a complete press release with our results can be accessed through our Web site at www.exelixis.com. Revenues for the fourth quarter were $44.1 million, compared to $29.6 million for the comparable period in 2008. Close to 50% increase in revenues was primarily due to increased license revenue from our new collaboration with BMS, and with…

Okay. Thanks, Frank. I’ll just make a few comments before closing and opening up the call for questions. 2009 certainly was a good year for Exelixis. We made substantial pipeline progress. We brought in significant new partnerships. And we ended the year with a healthy cash balance. We look forward to continued success in all three of these fronts in 2010. Restructuring that we announced yesterday will result in approximately $90 million in cash savings in 2010 and '11. Our R&D group has been structured to reflect our priority to aggressively push our later stage compounds through clinical development in our current market. At the same time, we've retained a world-class rediscovery group that will continue to bring new compounds into development, although obviously fewer. Importantly, we've retained the ability to meet our commitments to our current partners. And based on our continuing drug discovery capabilities and our pipeline with partner, we expect that our business activities for 2010 and 2011will be unaffected by the restructuring. Over the past few years, we built up one of the most promising oncology pipelines in the industry. The restructuring we announced yesterday is a reflection of our confidence in that pipeline and our commitment to aggressively move a selected group of compounds forward, important for us to think longer term now. Financially 2010 is unlikely to be an issue for us, especially clear from the numbers that Frank just presented. Yesterday’s action was taken so that we have the ability to continue our late-stage compounds as our programs mature and expand in 2011, '12, and beyond. Finally, I want to say that although that we’re convinced that the restructuring we announced yesterday is the right thing for the company and positions us well to move into the future, as you can imagine, it’s extremely difficult to release many people who contributed substantially to the company over the years and who our friends and colleagues. Our hearts go out to those employees and their families. On behalf of the management team and the Board, I want to express our sincere and deeply-felt gratitude for the contribution of the many Exelixis employees who are part of the reduction as well as those employees who remain. At this point, we’ll open up the call. We’ll be happy to take questions.

(Operator Instructions) And please stand by while we compile a list. Your first question comes from the line of Cory Kasimov with J.P. Morgan. You may proceed. Cory Kasimov – J.P. Morgan: Hi. Good morning, guys. Thank you for taking the questions. First, a financial question for you, Frank, when you say the restructuring charge may increase significantly later this year, how high might that get?

Those charges had not yet been finalized, so we can't really comment on the specific range yet. Cory Kasimov – J.P. Morgan: So there’s no way to ballpark that?

No, we don't have a specific estimate at this point. Cory Kasimov – J.P. Morgan: Okay. Fair enough. And then could you highlight what data we could potentially expect to see at ASCO this year?

Yes. Cory, this is Mike. We have, as I said in the prepared remarks, submitted numerous abstracts around our lead trials for XL184, XL147, XL765 as well as a couple of earlier compounds. I’m a little hesitant to go too much more into detail about those submissions until we hear back on what was accepted. And I think once we have a good sense of exactly what we'll be talking about in terms of actual studies at ASCO, then we’ll be very forthright with sharing that the contact – the content of what we will have in due time. Cory Kasimov – J.P. Morgan: Okay. And I guess the last one then, going into this restructuring yesterday. Now that you’re basically limiting ongoing investment in what you characterize as your non-core clinical assets, is it possible for you to maintain leverage in these ongoing partnership negotiations or should we just be expecting a series of small deals from this point forward?

Good question, Cory. I think the reason why we are comfortable making those statements in public is because we have multiple discussions going on. For some of those assets, we have multiple term sheets already on the table. And so we are fairly confident of being able to tie-in attractive collaborations around some of those assets. Cory Kasimov – J.P. Morgan: Okay. Thanks for taking the questions.

Your next question comes from the line of George Farmer with Canaccord Adams. You may proceed. George Farmer – Canaccord Adams: Hi, good morning. Thanks for taking my questions. Based on your pipeline review, it looks like you have one wholly-owned drug in Phase 1 and that would be XL888. That’s the HSP90 inhibitor. Is that correct? And what happens with that compound now going forward?

That is correct from the standpoint of that will be the compound that we invest in moving forward. That compound is in ongoing Phase 1 trial. We’re seeing very good signs of pharmacodynamic activity in both tumors and plasma, along with I think pretty attractive tolerability profile. We think that the compound – we can get to the next milestone or decision point with a modest investment of resources. So if the goal was – is to push to that go or no-go decision some time later in the year, and then be prepared to move that forward if the data warrants further investment. George Farmer – Canaccord Adams: Okay. Thanks.

And that’s of course the PI3K delta inhibitor that’s moving into development now is also fully-owned, and we’ll move that forward as well. George Farmer – Canaccord Adams: Okay. Thanks, George. And Frank, what’s the status of the GSK note? Can you remind us again, and what happens with that this year? Did you say you were thinking of refinancing that potentially?

The status of the GSK loan, as you may recall, it was – the principal amount was for $85 million. It's insured in three trenches over three years starting October 2009. We've repaid the first trench in October of last year in cash. The next trench is due in October of this year. And the last trench is due in October 2011. And as I mentioned, we are evaluating opportunities potentially to refinance the remaining trenches outstanding. George Farmer – Canaccord Adams: And you could pay that back with stock if you wanted to, correct?

We could also do that, yes. George Farmer – Canaccord Adams: Okay. Thanks very much.

The next question comes from the line of Joel Sendek with Lazard Capital Markets. You may proceed. Joel Sendek – Lazard Capital Markets: Thanks a lot. So regarding the restructuring, I’m just wondering if you can look – if I could ask you to share with us maybe even longer term – your longer term outlook on a couple of fronts, maybe you can't. But if you can, that'd be great. They said you’d end 2010 at about $200 million in cash. I’m wondering if how long of a runway that is. And then related to that, it seems as though you’re going through a bit of a maturation process and we heard drugs are a little bit farther along now. Are you managing the company potentially to be profitable at some point? In which case, do you have a year or a number of years that you could share with us until you would be profitable? And I guess the final of my third-part question there is, let’s say you have success with 184 or 147 and 765, and they start bringing in top line revenue. Would your objective be more inclined to become profitable or to reinvest those assets, and then start generating more IND (inaudible) and continue that cycle, if you could comment on these things? Thanks.

Joel, let me take that. So let me frame for you how we think about our runway. As I said in the prepared remarks, we expect the end of the year with about $200 million and assumed some level of re-activity and potential refinancing of the GSK loan. And assuming we meet our cash guidance as we have in the past and taking into account the effect of the restructuring, which significantly reduces our brand, we would go into 2011 with a healthy cash balance, significantly reduced brand, and we expect that this would extend our runway through 2011. Now, longer term, of course, we’re trying to be profitable at some point in the future. We’re not in the business of accumulating losses forever. And how exactly we'd go about this and when that will be, that remains to be determined.

Okay. And then just a quick update on one drug, the GSK collaboration, 880, is there – I think you mentioned that in your prepared comments, is there any update on that?

I did not. Joel, this is Mike. I didn’t have any, let’s say, focused update on foretinib XL880. GSK continues to develop that compound. They have announced a recent trial, and this is on control side (inaudible), looking at 880 in Phase 2 in HGC, so that’s public information. But beyond that, I can’t share any additional information on the development program for 880.

Okay. Thank you.

(Operator instructions) Your next question comes from the line of Edward Tenthoff with Piper Jaffray. You may proceed. Edward Tenthoff – Piper Jaffray: Great. Thank you very much. Just looking at the competitive landscape in thyroid cancer, we’re expecting data from a couple of compounds at ASCO this year. Can you lay out how you think that world is changing?

I would say this – the opportunity for us is to certainly have a compound like XL184 with broad activity and by potent activity against what we think are some of the key drivers for medullary thyroid cancer being (inaudible) and met, and also very strong activity against that. From a competitive point of view, I think we are excited about what we’ve seen in Phase 1 where the activity of XL184 in terms of both objective responses as well as prolonged duration of response was observed in patients with prior TKI therapy, including compounds like vandetanib, (inaudible), et cetera. So we’re pretty excited about this stage right now. And we believe we have a compound that is optimally designed to perform well in that space. So we’re certainly curious to see what’s going to come out of ASCO in June. But we’re again confident in the compound’s ability to work in that space. Edward Tenthoff – Piper Jaffray: Okay. Thanks, Frank.

With no further questions, I will now turn the call over to Mr. George Scangos for any closing remarks. You may proceed.

Okay. Let me thank all of you for your time this morning. We’ve had a lot going on here. I think what has been going on is an increasing, let's say, confidence in the data coming in from our compound. We’re starting to be able to see the light at the end of the tunnel. We are making sure that we have the resources that we need to get ourselves there. We certainly do have a view to becoming profitable in the future. And the exciting thing is those days are foreseeable in the future assuming the continued good data coming in from our compound. So we’re excited about where we are and about the data, and looking forward to a good year in 2010 and a good year in 2011 as well. So with that, I’ll thank you all for your attention. And we’ll close the call.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect, and have a great day.